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Default would threaten national security, keep troops from getting paid, Pentagon chief says


Lloyd J. Austin is the Secretary of Defense and testifies before House Armed Services Committee about the end of military operations against Afghanistan. He was speaking at the Rayburn House Office on Capitol Hill in Washington DC on September 29, 2021.

Olivier Douliery – Reuters| Reuters

Lloyd Austin, the Defense Secretary warned Wednesday that national security may be at risk and that troops could not receive their payments if Congress doesn’t raise the debt limit to the United States before it defaults.

Or, lawmakers must approve or suspend raising the debt ceiling before Oct. 18. Otherwise they risk not making a payment to bondholders. This would constitute a national default.

He wrote that if the United States falls into default, it would affect the economic strength upon the which our national safety rests in an email statement to reporters.

These impacts could be as simple as the inability of troops to pay or the loss of income for those who rely on the military for their survival.

He said, “It would also severely harm our military personnel and their families, because as Secretary, my authority and ability would not allow me to make sure that our service men, civilians or contractors are paid in full, on time, or at all.”

The Department of Defense is the federal largest employer. It stated that payments could be delayed for large businesses and small businesses, which can jeopardize American operations.

Austin stated that benefits owed to over 2.4 million veterans and their survivors could also be at risk. Social Security beneficiaries in the millions could have their checks delayed if Congress doesn’t act.

Minutes after six ex-defense secretaries from both parties wrote to the congressional leaders asking them to increase or suspend their debt limit, his comments came shortly afterwards.

The former Defense chiefs William Perry (Will Cohen), Leon Panetta and Chuck Hagel as well as Ashton Carter, Leon Panetta, Chuck Hagel and James Mattis, called for Congress to authorize the government to cover any bills that it had already incurred.

The debt ceiling is not raised or suspended. Instead, it allows Treasury Department to continue paying receipts from appropriation bills Congress already passed.

The former secretaries stated that the federal government had obligated funds to federal contractors, who manage our military bases abroad and at home as well as provide critical defense technology services. Our all-volunteer military should be paid to work for our country. We will have no military capable of fighting and winning the wars in our country if we do this.”

They wrote their letters to Democrats House Speaker Nancy PelosiSenate Majority Leader Chuck SchumerBoth to the Republicans Senate Minority Leadership Mitch McConnellHouse Minority Leader Kevin McCarthy

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Economists believe that a first ever U.S. default would not only delay the income of troops but also trigger an economic recession.

CNBC’s Janet Yellen, Treasury Secretary, said Tuesday that she would expect an economic recession in the event of default. She warned that inaction could cause an increase in interest rate and lessen the U.S. dollars’ role as the global reserve currency.

Austin made a similar threat in his Wednesday comments.

He wrote that a default could “undermine the international reputation for the United States as an reliable and trustworthy economic partner and national security partner.”

The severity of the consequences aside, Democrats and Republicans seem to be in lockstep just twelve days before the drop-dead deadline.

Senate Republicans promise to filibuster if Democrats try to block a debt ceiling rise or suspension via regular Senate rules. Filibuster will force Democrats to get at least 60 votes from a divided chamber 50-50 in order to pass a bill.

This obstruction was criticized by President Joe Biden who called for the GOP’s “get out the way” to help prevent another recession earlier in the week. He is meeting with some of the nation’s top CEOsWe will meet Wednesday to talk about the potential economic disaster that can result if legislators fail to act.

Republicans argue that Democrats should adopt a solution to the debt ceiling via a special rule called reconciliation. This allows for certain legislation to pass the chamber without requiring a simple majority.

McConnell, for many weeks, has argued that Democrats need to use reconciliation in lifting the borrowing limit. This is because the majority seems determined to force a multitrillion-dollar climate with anti-poverty bills through the same rule.

“I said in July, I said in August, I said in September, there’s a clear path to achieve raising the debt ceiling — which must happen, America must not ever default — and doing it with Democrats only,” he said during a Tuesday press conference.

Amanda Macias from CNBC contributed to the report.